Glenn Frey, RIP / Does Immigration Lower Wages?
January 20, 2016, 06:31 AM
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From The Atlantic:
The Great Immigration-Data Debate

Does the flow of new arrivals depress the wages of blue-collar American workers? It depends on how you measure.

DAVID FRUM. JAN 19, 2016 POLITICS

… One of the most influential such modeling exercises was a paper published by the University of California’s David Card in 1990. Card studied the economy of Miami after an influx of 125,000 Cuban migrants between April and October 1980, the “Mariel boat lift.” Under American law, Cuban migrants become almost immediately eligible to work in the U.S. The result: In bare weeks, the greater Miami workforce jumped by 8 percent—and the stock of workers without a high-school diploma spiked a startling 20 percent. Yet—according to David Card—even this large and sudden supply shock had no negative effect on the wage trend for low-skilled workers. (Wages did decline, he finds, but no more for those workers he regarded as competing with Marielitos than for those he regards as not competing.)

This finding, if true, carried enormous implications. The United States in the 1990s would experience a vast surge of very low-skilled migration, legal and illegal, from Mexico and Central America. Simple economic logic predicted that competition from these migrants should depress the wages of native-born Americans. Card reassured policymakers that simple logic was wrong: They could welcome the newcomers at no cost to the settled population. Here at last was the free lunch that Milton Friedman had so obstinately insisted could not exist.

How was it possible that immigration could stand as the sole exception to the usual laws of supply and demand?

Okay, but as I’ve been pointing out since 2006, Card made the assumption that the only thing different about Miami’s economy in 1980-1984 from his control group of American cities with similar economic growth to Miami in the late 1970s was the Mariel boat lift. But ceteris wasn’t paribus because Miami, unlike the rest of America in 1980-84, was suddenly being flooded with suitcases full of $100 bills in exchange for cocaine from Colombia. All else was definitely not equal. The Mariel boat lift happened to coincide very closely in time and place with the cocaine boom of 1980.

I repetitiously argue that economists should be familiar with this famous episode in economic history from lurid pop culture artifacts, such as the current Netflix TV show Narcos, the 1983 movie Scarface, and the 1984 television drama Miami Vice. (Oliver Stone’s screenplay for Scarface even prophesied that Cuban criminals arriving in the Mariel boat lift would take over the Miami cocaine trade, although in retrospect that doesn’t seem to have happened to the extent imagined in the movie.)

The death of the former member of the Eagles, Glenn Frey, at age 67, should be another reminder to economists. One of Frey’s solo hits was his 1984 song “Smuggler’s Blues,” a densely plotted saga about the Florida cocaine trade which was turned into this elaborate MTV video.

Glenn Frey - Smuggler`s Blues Video (1985) from MTVClassic1 on Vimeo.

I believe it also served as the inspiration for a Miami Vice episode guest-starring Frey.

 

[Comment at Unz.com]